In November 2016, the Canadian government announced that it will
significantly raise the financial threshold above which foreign
investments into Canada are subject to a pre-closing "net
benefit" review under the Investment Canada
Act (ICA). All legislative amendments required to
implement these proposed changes are now before Parliament and are
expected to pass and come into force by the summer of 2017.
Currently, for direct acquisitions of non-cultural Canadian
businesses by a non-state-owned WTO investor, transactions are
subject to a pre-closing "net benefit" review where the
enterprise value of the acquired Canadian business exceeds C$600
million. This threshold is scheduled to increase to C$800 million
on April 24, 2017, and then to C$1 billion on April 24, 2019 (and
indexed annually to GDP growth beginning in January 2021).
The budget implementation bill (Bill C-44) introduced in
Parliament on April 11, 2017 will amend the ICA to raise the review
threshold for WTO investors directly to C$1 billion (then to be
indexed annually to GDP growth).
Separately, the bill to implement the Comprehensive Economic and
Trade Agreement between Canada and the European Union (Bill C-30 ), which already
passed the House of Commons and is currently before the Senate,
will raise the review threshold to C$1.5 billion (then to be
indexed annually to GDP growth) for investors from the European
Union and other countries with which Canada has pre-existing
free-trade agreements (the United States, Mexico, Chile, Peru,
Colombia, Panama, Honduras and Korea).
Parliament is expected to pass both Bills C-30 and C-44 before
it breaks for summer recess in late June. The review threshold for
WTO investors will increase to C$800 million on April 24, 2017 as
scheduled and the new C$1 billion threshold for WTO investors and
C$1.5 billion threshold for trade agreement investors are expected
to be proclaimed in force by the summer of 2017.
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As indicated in our March 2017 bulletin, the Government of Canada previously announced its intention to accelerate by two years the previously scheduled increase to the "enterprise value" threshold under the Investment Canada Act
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